Finances

Seventy percent of people over 65 today can expect to need some form of long-term care.

Will We Be Able to Afford Being 100?

If you watch much TV, you’ve probably noticed the proliferation of marketing targeting the over-60, thinking-about-retiring-but-anxious-about-their-nest-egg generation.

Might you outlive your money? Will you be able to retire? Can you afford your medications? These are some of the questions that underpin billions of dollars in today’s ad budgets—much of it for pharmaceuticals or financial services—and that loom over the lives of roughly 46 million U.S. seniors.

CAREGIVING OF ELDERS

The first casualty, he says, is already upon us: the working- and middle-class family, which bears the bulk of the load in caring for elders. Family members, especially women, either downsize their jobs or leave them altogether—nearly 40 percent of female caregivers, says Gautam, have been shown to do this—which in turn depletes their retirement savings, while at the same time lowering the U.S. Social Security benefits they can expect to receive.

There’s no sign of this trend abating, he says.

Seventy percent of people over 65 today, Gautam explains, can expect to need some form of long-term care. Once that day arrives, the family faces a choice: either tap their savings to pay the roughly $45,000 yearly for a home health aide (or twice that for a nursing-home bed)—until the savings are exhausted, at which point Medicaid takes over—or take care of mom or dad themselves, which will often mean leaving a job.

And every year, as the ratio widens between age groups, the problem grows more acute.

“It’s not sustainable,” says Prof. Monica Galizzi, chair of economics in the College of Fine Arts, Humanities and Social Sciences: “We’ve moved away from the pension system in this country, which leaves most people relying only on themselves for their retirement. And there’s just too small a base of younger workers out there contributing to Social Security and Medicare—which is what is supposed to support the larger base of older people now retiring. And the younger group, meanwhile, are also having to care for their parents. That’s not something that can last."

KEEPING SENIORS IN THE WORKFORCE

One issue driving the problem, says Galizzi, is that not all of the seniors leaving the workforce are doing so by choice: “A lot of them would prefer to work longer, but then they find out that their skills don’t apply anymore, that they don’t know the new technologies."

“There’s a huge opportunity out there for educational institutions: teaching new skills to some of our older people, getting them back working, getting them to stay involved. I think there’s a real market for that."

According to alumna Alice Bonner ’89, secretary of the executive office of elder affairs in Massachusetts, the government is making it a priority to keep older Americans working.

“A lot of people 60-90 want to keep working—or have to,” says Bonner, who is leading Massachusetts’ effort to become the most age-friendly state. “It’s a fast-growing group of active, productive people who contribute to the economy and benefit businesses.” The over-50 population is responsible for nearly 100 million jobs, she says, and over $4.5 trillion in wages and salaries. “And to top it off, they have the knowledge and experience that smart employers value.”

A BROKEN SYSTEM

Underlying all these issues—the burden on families, the imbalance between generations, the overdue need for senior training—is a core reality: The U.S. health care system is broken and needs to be fixed.

“There are just no policies in place,” says Gautam of health sciences. “Medicaid is the primary provider for nursing-home care; it’s paying over half of all long-term care costs, but only after a family’s savings are exhausted. And Medicaid spending is projected to continue to increase. That’s not a system that can last.

“In other countries, you have mandatory enrollment; in Japan, for instance, everyone pays in once they reach 40. But here, when it come to long-term care, there’s no provision at all. The laws under consideration by Congress don’t even address it— they never have. It’s all so shortsighted."

Prof. Galizzi, while no less focused on the system’s drawbacks—the “No. 1 challenge,” she says, is that we “do something to make Medicare and Social Security sustainable”—is more sanguine when it comes to the long term. If there’s to be any relief at all, she says, it may have to come from the seniors themselves.

"The 65-year-olds of today, I think, have more awareness than the 65-year-olds of 20 or 30 years ago,” she says. “They see the need, they see what’s going on. In the end, that should serve us all well."